Ahead of 2019 continental aviation economics, the Geneva-based apex aviation body, International Air Transport Association (IATA) has predicted a $300 million net loss for African carriers.
In a statement issued by its director-general, Mr. Alexandre de Juniac, in Lagos, the group said the continent recorded a slight improvement from the $400 million net loss by airlines in the region in 2018.
IATA noted that all regions, except Africa, were expected to report profits this year and 2019.
He said “North American carriers are expected to deliver the strongest financial performance in 2019 with a $16.6 billion net profit (up from $14.7 billion in 2018)”.
de Juniac argued that “The expected net loss per passenger is $3.51 (-2.1 per cent net margin). This makes Africa the weakest region, as it has been over the past four years.
“Performance is improving, but only slowly. Losses are expected to be cut in 2019 as fuel prices decrease. The region benefits from higher-than-average yields and lower operating costs in some categories.
“However, few airlines in the region are able to achieve adequate load factors to generate profits,” de Juniac said.
Besides, IATA foresees the global airline industry net profit to be $35.5 billion in 2019, slightly ahead of the $32.3 billion expected net profit in 2018.
Continuing, IATA boss added that “European carriers are expected to report a $7.4 billion net profit in 2019 (down slightly from $7.5 billion in 2018), while Asia-Pacific carriers are expected to report a $10.4 billion net profit in 2019 (up from $9.6 billion in 2018).
“Middle Eastern carriers are expected to report an $800 million net profit in 2019 (up from a weaker $600 million in 2018) and Latin American carriers are expected to report a $700 million net profit in 2019 (up from $400 million in 2018).”He said that the overall industry revenues were expected to reach $885 billion, a 7.7 per cent increment on the $821 billion recorded in 2018.
Additional forecasts show that passenger population was expected to reach 4.59 billion, up from 4.34 billion in 2018, he said.
“Lower oil prices and solid, albeit slower, economic growth (+3.1 per cent) are extending the run of profits for the global airline industry, after profitability was squeezed by rising costs in 2018.
“It is expected that 2019 will be the 10th year of profit and the fifth consecutive year when airlines deliver a return on capital that exceeds the industry’s cost of capital, creating value for its investors.
“We had expected that rising costs would weaken profitability in 2019.But the sharp fall in oil prices and solid GDP growth projections have provided a buffer.“So we are cautiously optimistic that the run of solid value creation for investors will continue for at least another year.“But there are downside risks as the economic and political environments remain volatile,” Alexandre de Juniac, said.
